January 26, 2013

Rise of the (job killing) machines?

Progress favors brains over brawn, and millions of midskill jobs have vanished in just the last five years.

By BERNARD CONDON and PAUL WISEMAN The Associated Press

(Continued from page 1)

Just Brudeau
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This Sony 3-D personal viewer at the Consumer Electronics Show in Las Vegas is just a high-tech gadget, but may also be seen as a forerunner of much higher-tech automation that replaces jobs now performed by people.

The Associated Press

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This engineer in Budapest, Hungary, could be an example of what some futurists fear: Highly skilled workers prosper, but midskilled workers are shunted into lower positions.

The Associated Press

So the rise of computer technology poses a threat that previous generations of machines didn't: The old machines replaced human brawn but created jobs that required human brains. The new machines threaten both.

Here are the three scenarios that economists and technologists offer about jobs in the future:

The economy returns to health after a wrenching transition

It has always happened before. Europe and the United States endured repeated economic and social upheaval during the 19th and early 20th centuries as their agricultural economies transformed into industrial ones. Columbia's Stiglitz argues that such pressures led to the collapse of the world economy in 1929 -- the cataclysm we call the Great Depression.

The mechanization of farming caused agricultural production to soar worldwide in the 1920s -- and prices to plunge. In the U.S., crop and livestock prices fell by 50 percent between 1929 and 1932. American farmers, who accounted for a fifth of the U.S. workforce, lost purchasing power and also struggled to pay their mortgages and other loans. As their debts went bad, banks began to collapse, squeezing credit and spreading panic. The economy went into free-fall.

Only World War II -- and the massive rearmament program it required -- restored the U.S. economy to full health. The experience was traumatizing. And today only 2 percent of Americans work on farms.

"Economies don't make these transitions well," Stiglitz says. People in the dying parts of the economy can't afford to invest in the education or retraining they need to find different work. "So you get workers trapped in the wrong sectors or unemployed," he says.

Peter Lindert, an economist at the University of California-Davis, says computers are more disruptive than earlier innovations because they are "general-purpose technologies" used by all kinds of companies. They upend many industries instead of just a few. The mechanized looms the Luddites hated in England in the early 1800s, for instance, rattled one industry. Information technology touches every business.

The changes are coming much faster this time, too. Lindert says that's showing up in the steep drop in prices for some products this time.

In the Industrial Revolution, "the price of textiles went down. But it was a small number compared to how the cost of information storage has gone down. It's a fraction of what it was in the 1970s," Lindert says. Now, computing power is doubling every 18 months to two years -- and the price is plummeting.

But Lindert does not believe workers are doomed to unemployment. With the right skills and education, he says, they can learn to work with the machines and become productive enough to fend off the automation threat.

The rise of the iPhone, for instance, has put more than 290,000 people to work on related iPhone apps since 2007, according to Apple.

"Over the long run, I have confidence we can do it," Stiglitz says. But, he warns, "I can see us being in this kind of doldrums for half a decade, for a decade, or for longer."

Economy continues to produce jobs -- just not enough good ones

Some economists worry that the sluggish, lopsided labor market of the past five years is what we'll be stuck with in the future.

Smarter machines and niftier software will continue to replace more and more midpay jobs, making businesses more productive and swelling their profits.

The most highly skilled workers -- those who can use machines to be more productive but can't be replaced by them -- will continue to prosper. Many low-pay jobs are likely to remain sheltered from the technological offensive: Robots are too clumsy to tidy up hotel rooms or clear dirty dishes at busy restaurants.

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